14/05/2010 - 11:58

Griffin's Worsley contract in doubt

14/05/2010 - 11:58

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Up to half of the 500-strong workforce at collapsed Griffin Coal is reportedly at risk of losing their jobs next month as customer Worsley Alumina talks to Wesfarmers' Premier Coal about switching its coal supply.

Up to half of the 500-strong workforce at collapsed Griffin Coal is reportedly at risk of losing their jobs next month as customer Worsley Alumina talks to Wesfarmers' Premier Coal about switching its coal supply.

Administrator KordaMentha told bondholders at a road show in Hong Kong earlier this week that it was looking to reduce the workforce should Worsley change coal supply camps, according to a report by finance news service Merger Market.

The report, citing an unidentified bondholder, said that if the Worsley contract was terminated, KordaMentha would have the option of scaling back production to about 2 million tonnes each year using a skeleton workforce.

The coal would be supplied to the Bluewaters I and II power stations and minor customers.

Worsley currently takes in some 1 million tonnes of coal each year from Griffin.

Worsley, which is 86 per cent owned by BHP Billiton, declined to comment on the report. Comment was being sought from Wesfarmers at time of publishing.

There is also pressure coming from Verve Energy with its coal supply contract set to end next month. The lucrative contract is reportedly set at about double the price of Griffin's other offtake agreements.

The revelations come at a time when more than 280 unionised Griffin Coal employees are currently in negotiations with KordaMentha over a work contract that expires in June, Merger Market reported.

Meantime, bondholders were told that a shortlist of potential buyers for Griffin's mines is expected to be revealed in the next six to eight weeks.

KordaMentha also told bondholders that it would cost between $100 million and $120 million to ramp up Griffin's infrastructure facilities to take advantage of the export market.

Rick Stowe's Griifin empire collapsed early this year with Griffin Coal and Griffin Energy together owing about $1 billion to creditors, including $530 million to US bondholders.

Any buyer of the power assets will also have to deal with an additional $1.2 billion in debts racked up to fund construction of Griffin's power stations.

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